How to Create a Budget Pie Chart: Benefits and Strategies

Knowing how to budget is essential to plan for the future of your finances and stay on top of your expenses. 

Whether it’s for a business expense or personal finances, an effective budget ensures that you are transparent with your money to cover necessary expenses and financial obligations, along with extra for personal use.

Using a visual aid, such as a budgeting pie chart, will help you visualize where your money is going and how to adjust your budget accordingly.

What should you do before creating a budget?

1. Think about your income and tax laws

Depending on your country, different budgeting techniques and tax laws may apply.

For example, in the U.S., people need to consider taxes such as federal and state taxes. 

In other countries, budgeters may be taxed only on their earned income and not on capital gains or investments. 

It’s a good idea to research your country’s ideal budgeting rules before creating a budget. Additionally, understanding government spending can give you a forecast of your future budgeting needs.

2. Consider the factors that go into budgeting

There are various factors to consider depending on where you live and your financial situation.

The main factors that should be considered are the following:

a. How often you are paid

Do you get paid biweekly, monthly, or irregularly?

Knowing how often you get paid will help you keep track of and spread out your expenses throughout the month.

Getting paid regularly makes it easier to track your spending, and you won’t have to worry about a set monthly allowance. 

An irregular pay cycle can make budgeting and planning for the future more difficult, as it’s hard to predict when your income will arrive.

b. What your lifestyle is like

Are you the type of person who eats out often? Do you live a minimalist lifestyle?

A more extravagant life means you must allocate more of your income toward these expenses. 

A minimalist lifestyle allows you to allocate your money to other budget categories.

Knowing your spending style lets you see where your money is going.

c. Whether or not you have any loans or other debts

Do you have any school debt, personal loans, or car loans that need to be paid off?

The average adult takes 21 years to pay off their school-related debt. 

At the same time, loans such as cars and mortgages have repayment plans that can take 5, 10, and sometimes 30 years. 

Additionally, loan and debt payments have interest that will occur over time, increasing budgeting needs.

When you don’t have debt or loans to pay, you will have more money to spend on fun activities or build up your savings, retirement, and investments.

d. Mandatory spending (social security, etc.)

Mandatory spending, which includes critical entitlement programs such as Social Security and Medicare, represents approximately two-thirds of total federal expenditures and is set by existing laws, not requiring annual Congressional approval for funding.

This type of spending significantly impacts the budgeting process, as it contrasts with discretionary spending, which is determined through annual budgetary processes.

What is a budgeting pie chart?

A budgeting pie chart is a visual representation of your income and expenses, divided into categories to help you track your spending and stay aware of your financial situation.

This handy tool allows you to see at a glance where your money is going and make informed decisions about how to allocate your income.

Typically, a budgeting pie chart includes categories such as income, necessary expenses, savings, and debt repayment.

By breaking down your finances into these segments, you can create a balanced budget that aligns with your financial goals and helps you manage your money more effectively.

What is the budgeting rule?

Many online and financial resources such as NerdWallet and Investopedia have the 50-30-20 budgeting rule.

This rule divides your income and spending into the 3 categories below:

• 50% on needs (rent/mortgage payments, food, clothing, transportation, utilities)

• 30% on wants (discretionary budget for vacations, dinners out, gadgets)

• 20% on savings (short-term and long-term savings goals such as an emergency fund or retirement savings)

Example of a personal finance budget pie chart, Vizzlo

How do you create a budgeting pie chart?

First, you need to create a spreadsheet of your expenses.

You should have 4 overarching categories with subcategories based on the 50-30-20 rule. 

Below are some categories to include:

• Income

• Necessary expenses (rent/mortgage, transportation, groceries, utilities)

• Financial properties (student debt, car loan, savings)

• Wants (entertainment, shopping, eating out, monthly subscriptions)

Example of monthly budget overview spreadsheet, Excel-Easy

Once you have a budget spreadsheet and the total for each category and subcategory, you can use budgeting tools such as Microsoft Excel or Google Sheets to create a financial pie chart.

What are the benefits of using a budgeting pie chart?

A visual aid, like a pie chart, can be useful to see how much you’re spending and where your money is going.

Using a budgeting pie chart to scrutinize your expenses, rather than numbers on a spreadsheet, makes money allocations easier to interpret. 

A pie chart helps break down each category of where you are spending, allowing you to adjust your spending as needed.

Why you need to analyze and adjust your budget

Regularly analyzing and adjusting your budget is essential for maintaining a balanced financial situation.

By reviewing your financial pie chart, you can identify areas where you might be overspending and make adjustments to allocate more funds towards savings or other priorities.

Life events such as having children, paying off debt, or saving for retirement can significantly impact your financial pie chart, necessitating budget adjustments. For instance, if you’re planning for a new addition to the family, you might need to reallocate funds from discretionary spending to childcare and education expenses.

By monitoring and tweaking your budget on a monthly or quarterly basis, you can stay on top of your financial situation and ensure that your spending habits support your long-term financial goals.

Common mistakes to avoid when budgeting

When it comes to budgeting, there are several common mistakes that can derail your financial plans.

Not tracking expenses, failing to maintain an emergency fund, and prioritizing wants over needs are some of the pitfalls to avoid.

By using a financial pie chart and regularly reviewing your budget, you can sidestep these mistakes and achieve a balanced financial situation.

For example, overspending on housing can leave you with little room for savings or other essential expenses. It’s important to keep your housing costs within a reasonable percentage of your income and focus on saving and investing for the future.

By prioritizing needs over wants and maintaining a disciplined approach to budgeting, you can build a solid financial foundation and avoid common budgeting errors.

Strategies to track expenses with budgeting pie charts

There are many different strategies to track your expenses.

One way is to immediately note when you receive and spend money. This option can be tedious, but it provides precise tracking and spending. 

Alternatively, you can keep all of your receipts and input them at the end of the day. 

How to use Shoeboxed to track expenses

Shoeboxed is an expense-tracking app that can help you manage your expenses. 

Instead of individually inputting the information from your receipts into a spreadsheet, you have two options:

1. Use the Shoeboxed app to scan your receipts.

2. Use Shoeboxed’s Magic Envelope to mail your receipts and receive the information digitally.

Both options will have your receipts’ information, such as the vendor, date, cost, category, and payment type in your Shoeboxed account for you to then export as an excel file or CSV. 

Afterward, you can create a budget pie chart to see where your spending is going and adjust your money accordingly.

How to export your expenses as an excel, Shoeboxed

In closing

A budgeting pie chart is an easy way to see your finances visually. 

It can help you to better understand where your money is going each month and allow you to adjust as needed to improve your spending habits.

With the right budgeting method and planning, you’ll be in control of your finances in no time!

Tammy Dang is a staff writer for Shoeboxed covering productivity, organization, and digitization how-to guides for the home and office. Her favorite organization tip is “1-in-1-out.” And her favorite app for managing writers and deadlines is Monday.com. 

About Shoeboxed!

Shoeboxed is a receipt scanning service with receipt management software that supports multiple methods for receipt capture: send, scan, upload, forward, and more!

You can stuff your receipts into one of our Magic Envelopes (prepaid postage within the US). Use our receipt tracker + receipt scanner app (iPhone, iPad and Android) to snap a picture while on the go. Auto-import receipts from Gmail. Or forward a receipt to your designated Shoeboxed email address.

Turn your receipts into data and deductibles with our expense reports that include IRS-accepted receipt images.

Join over 1 million businesses scanning & organizing receipts, creating expense reports, and more—with Shoeboxed.

Try Shoeboxed today!